Variable Costing Income Statement; Reconciliation LO6-1, LO6-2, LO6-3 During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $25 per unit) $1,000,000 $1,250,000 Cost of goods sold (@ $18 per unit)  720,000  900,000 Gross margin 280,000 350,000 Selling and administrative expenses*  210,000  230,000 Net operating income $ 70,000 $ 120,000 *$2 per unit variable; $130,000 fixed each year. page 286 The company's $18 unit product cost is computed as follows: Direct materials $4 Direct labor 7 Variable manufacturing overhead 1 Fixed manufacturing overhead ($270,000  45,000 units) 6 Absorption costing unit product cost $18 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 45,000 45,000 Units sold 40,000 50,000 Required: Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? Reconcile the absorption costing and the variable costing net operating income figures for each year